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Expansion in industrial earnings weakens
By Wang Yanlin |
December 28, 2011, Wednesday
|
Print Edition
Print Edition
CHINA'S industrial companies have seen growth in profit weaken further in the first 11 months of the year amid a cooling economy, leading analysts to call for more policy stimulus.
The net earnings of Chinese manufacturers increased 24.4 percent from a year earlier to 4.66 trillion yuan (US$739 billion) in the year to November, the National Bureau of Statistics said yesterday.
But the pace is slower than the 25.3 percent recorded between January and October, and 27 percent in the first three quarters.
"Rising production costs, shrinking external demand and a still prudent monetary policy stance work together to slow profits for industrial companies," said Li Maoyu, an analyst at Changjiang Securities Co.
Li said the government should unveil more policy stimulus measures in the near term and also to ensure a reasonable growth in credit to support economic expansion.
It's no surprise the manufacturing sector is weakening as China's gross domestic product has seen growth moderate in each of the first three quarters, from 9.7 percent in the first three months to 9.5 percent in the second quarter to 9.1 percent between July and September. Some financial institutions estimated the growth rate will slow to as low as 8 percent next year.
The official Purchasing Managers' Index, a gauge of manufacturing activities, slipped to 49 in November, the lowest in almost three years. A reading below 50 means contraction of industrial activity.
To address the slow economic growth the People's Bank of China has allowed banks to put aside less capital as reserves earlier this month, and ordered lenders to grant more credit to small- and medium-sized companies.
"It seems more policy fine-tuning is needed if the government wants to bolster industrial production and industrial profit," said Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd.
The net earnings of Chinese manufacturers increased 24.4 percent from a year earlier to 4.66 trillion yuan (US$739 billion) in the year to November, the National Bureau of Statistics said yesterday.
But the pace is slower than the 25.3 percent recorded between January and October, and 27 percent in the first three quarters.
"Rising production costs, shrinking external demand and a still prudent monetary policy stance work together to slow profits for industrial companies," said Li Maoyu, an analyst at Changjiang Securities Co.
Li said the government should unveil more policy stimulus measures in the near term and also to ensure a reasonable growth in credit to support economic expansion.
It's no surprise the manufacturing sector is weakening as China's gross domestic product has seen growth moderate in each of the first three quarters, from 9.7 percent in the first three months to 9.5 percent in the second quarter to 9.1 percent between July and September. Some financial institutions estimated the growth rate will slow to as low as 8 percent next year.
The official Purchasing Managers' Index, a gauge of manufacturing activities, slipped to 49 in November, the lowest in almost three years. A reading below 50 means contraction of industrial activity.
To address the slow economic growth the People's Bank of China has allowed banks to put aside less capital as reserves earlier this month, and ordered lenders to grant more credit to small- and medium-sized companies.
"It seems more policy fine-tuning is needed if the government wants to bolster industrial production and industrial profit," said Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd.
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